By BankingMyWay.com Staff
A lot of attention has been paid to the rate of personal savings accounts in the United States ever since the recession began.

This metric measures the difference between disposable income and consumption spending. As the economy turned downward, the savings rate turned upward for the first time in about four years. At the peak of the housing bubble in 2005, the savings rate actually went negative, indicating Americans were spending more than they earned. However, according to the Commerce Department, in January 2009, the U.S. personal savings rate was higher than it had ever been for over a decade, topping 5%.

Fears of even worse economic conditions have caused many Americans to reevaluate their financial situation and start saving more.  So, that begs the question, “How much should you save?” Though simple enough, the answer is not quite cut and dry. While the rule of thumb has long been to save at least 10% of your salary, given today’s economic environment, that rule is open to interpretation.

The amount of money you put away for a rainy day really depends on your current financial situation. Here are a few things you should consider when setting your monthly savings goals:

How Much Emergency Savings You Currently Have

Most experts recommend people have at least three to six months worth of expenses in a liquid emergency savings fund. (BankingMyWay.com’s Emergency Saving Calculator can help you determine your emergency savings needs.) Since the economic downturn, many experts have revised that recommendation upwards, however, to between six months and one year. Your emergency savings fund is meant to cover your monthly obligations should you lose your job or encounter other unexpected circumstances and expenses. If you currently have a fully or partially funded emergency savings fund, however, you can afford to contribute less to your savings on a monthly basis. The Savings Goals Calculator at BankingMyWay.com can help you determine how much you need to save monthly to reach your emergency fund goal.

Level of Debt

If you have a substantial amount of high-interest debt through credit cards, for example, that should be a high priority in your budget. Some financial experts like Suze Orman, a CNBC host and best-selling personal-finance author, have advocated only paying minimum balances on credit cards for a period while you build up your emergency fund. The reasoning behind this strategy is that because of the credit crunch, cash may be the only thing that protects you in case of emergency. Paying down your credit cards may not free up more credit to be used in an emergency because credit card companies are now lowering available credit limits and freezing credit lines.

But paying only the minimum balance on high-interest debt can cost you a lot in finance charges in the long run. This strategy should only be used for a short period of time and only if you have little or no emergency cash on hand.

Job Stability
If your job may be in jeopardy, you should start hoarding cash now. If you are laid off, you will need that cash to cover your expenses while you find a new job. The current job market is extremely tight, so that could take a while. If you fear a lay off may be in your near future, look for ways you can decrease spending and increase savings as much as possible.

—For more ways to save, spend, invest and borrow, visit MainStreet.com.